Monday, November 05, 2012

domain name may be noncommercial speech; TM rules don't apply

The Supreme Court has endorsed copyright
exceptionalism—ordinary First Amendment doctrines just don’t apply, because
copyright has to be constitutional (regardless how far it’s strayed from what
the Framers understood to be “copyright”).Courts are inclined to do this with trademark too, even though, as the
recent Stolen Valor Act case made clear, the “deception” rationale for
trademark protection fits neatly into broader First Amendment narratives.This case represents a particularly blatant
example of trademark exceptionalism.I’m
not saying it’s wrongly decided; I just really don’t like special pleading in
the First Amendment context.

The TDI sent a C&D to Gibson, a plaintiff’s attorney who
does workers’ comp claims and uses the domain name texasworkerscomplaw.com,
stating that his domain name’s use of the words “Texas” and “Workers’ Comp”
violated the Texas Labor Code. He sued
alleging that the relevant statutory provision violated the First, Fifth, and
Fourteenth Amendments, and the district court dismissed for failure to state a
claim.The court of appeals affirmed in
part and reversed in part.

The relevant provision states that

a) Except as authorized by law, a
person, in connection with any impersonation, advertisement, solicitation,
business name, business activity, document, product, or service made or offered
by the person regarding workers' compensation coverage or benefits, may not
knowingly use or cause to be used:

(2) any term using both “Texas” and
“Workers' Compensation” or any term using both “Texas” and “Workers' Comp”;

(3) the initials “T.D.I.”; or

(4) any combination or variation of
the words or initials, or any term deceptively similar to the words or
initials, described by Subdivisions (1)-(3).

The statute also bars use of these terms along with the
state seal, images of the state, or official logos.

Restrictions on commercial speech have to pass Central Hudson scrutiny.Gibson argued that this was a content-based
regulation deserving higher scrutiny, but the court disagreed: the law was
viewpoint-neutral, and it didn’t restrict all speech relating to workers’
compensation.He argued that his domain
name was inextricably intertwined with his website’s content, which includes
his views on the need for legal reform.(Is
a domain name ever inextricably intertwined with the content of the site?No law of humanity or nature seems to require
that.)But that was speech outside the
reach of the regulation, and it didn’t make this regulation one that
discriminated against content.Gibson
also argued that the law was a prior restraint, but the Supreme Court has held
that laws aimed at prohibiting deceptive commercial speech are unlikely to
implicate the prohibition on prior restraints. Friedman v. Rogers, 440 U.S. 1 (1979) (not incidentally, a case
about a Texas regulation of the use of certain terms by businesses). Anyway, this wasn’t a prior restraint; it
provided a penalty for past speech.

So did the statute regulate commercial speech?The court of appeals agreed that the domain
name and associated blog might do more than propose a commercial
transaction.But the domain name could
still be commercial speech if it’s an ad, referring to a specific product, with
an economic motivation.“A domain name,
which in itself could qualify as ordinary communicative speech, might qualify
as commercial speech if the website itself is used almost exclusively for
commercial purposes.”The court of
appeals designed to resolve the issue, because even if the domain name was
commercial speech, Gibson stated a claim; on remand, Gibson could submit
evidence that his domain name was noncommercial speech.

Now, the key Central
Hudson moment: commercial speech that is false, deceptive, or misleading
may simply be banned.But is that
determination to be made wholesale or retail?Well, inherently misleading speech can be banned outright, while speech
that is only potentially misleading is different.To be completely unprotected, the commercial
speech must either be inherently misleading or the record must show that a
particular “form or method” of advertising has in fact been deceptive.Pub. Citizen, Inc. v. La. Attorney
Disciplinary Bd., 632 F.3d 212, 218 (5th Cir. 2011) (citing In re R.M.J., 455
U.S. 191 (1982)) (Again leaving the wholesale/retail line unclear.)

Texas argued that the domain name was inherently misleading,
citing trademark cases refusing to apply First Amendment protection for domain
names that used marks “to misidentify the source of a product.”But these cases were “unique to the field of
trademark infringement, and [did] not necessarily extend to a case such as this
one, where Texas is prohibiting Gibson from using words that are otherwise in
the public domain.”The court continued:

Cases involving trademark
infringement involve inherently deceptive speech because they contain a significant
risk that an infringing party will freeload on the goodwill that has been
created by the original trademark. No such risk is present here. Texas has made
no showing that its own talents and energy contributed to the creation of any
goodwill in the name “texasworkerscomplaw.com.” Instead the regulation at issue
is forward-thinking; intended to prohibit confusion for individuals seeking
information from the government agency. It is not retrospective in the same way
as most trademark litigation, which is generally intended to preserve the
reputation that has been built upon a trade name.

Okay, set aside the equation of free riding with harm.The only reason there’s “inherently” a risk
of free riding from infringement is
because of the risk of deception about
source, which is the exact same risk at issue here.The question is not whether Texas has
“goodwill” in the conventional sense in the particular domain name chosen by
Gibson, but rather whether Gibson’s domain name creates a significant risk that people will believe it is official.Even if I assume, contrary to what most
Texans are likely to tell me, that Texas lacks a preexisting brand
identity/reputation, the aim of preventing confusion is trademark’s aim.We even protect
inherently distinctive marks without secondary meaning (reputation); the
trademark question is, in exactly these words, whether people will be confused
into thinking that the domain name indicates official/authorized source,
whatever that source is.Here, that
source is (allegedly) the state of Texas.

(NB: Let me emphasize that I think trademark has lost its
anchor in harm, and that materiality and harm should also be required; under Central Hudson, perhaps they should be
required as a matter of constitutional law.Thus, I’m not saying that Gibson should lose.But pretending that trademark has some
completely different theory is intellectually dishonest and helps insulate
trademark from proper scrutiny.And this
case further cements my conviction that “goodwill” is a magic word that
prevents thought about what is actually going on.)

The court also said that most of the trademark cases cited
(e.g., Planned Parenthood v. Bucci), domain names were (ed. note: wrongly) held
not to be protected speech because they weren’t expressive, not because they
were misleading.But Gibson’s domain
name was expressive because it did more than simply mimic the state agency’s
website or identify a source of workers’ comp law.Instead, it was intended to direct visitors
to a forum for discussing such laws and potential reforms, and to convey “the
message of Gibson's website as a whole.”

Anyway, in non-trademark cases, “inherently deceptive speech
has been found in essentially one other area: attorney solicitation of
prospective clients.” (Though Gibson’s
blog might be a solicitation, the rule here wasn’t directly related to his
legal practice.The alleged harm was
confusion with a government agency, not harm to a solicited client.)The risk of harm found in attorney
solicitation cases was not present here.There was no history from which a court could conclude that the speech
covered by the statute, and domain names like this one, were inherently
deceptive.And there were no factual
findings to support a claim of actual deceptiveness.Thus, some First Amendment protection
attached.

Even speech that isn’t inherently misleading can be
regulated if the regulation directly advances a substantial state interest, and
is no more extensive than necessary to serve that interest.The state’s interest was to prevent misuse of
state names and symbols, but Texas conceded that it didn’t yet have the record
to satisfy its burden under this branch of Central
Hudson.Though history, consensus,
and common sense can be enough, the district court here still erred by relying
on the legislative record without further briefing.The case would be remanded on the as-applied
challenge. Gibson also alleged facial unconstitutionality, which could be
addressed on remand as well.

However, Gibson’s Fifth and Fourteenth Amendment challenges
were unmeritorious.As for the equal
protection claim, there was no claim of discrimination against members of any
protected class or of uneven application as to similarly situated individuals.Instead, he argued merely that the law
subjected him to controls not placed on similarly situated individuals or
businesses.“The mere fact that a law
impacts different individuals in different ways does not subject it to
constitutional challenge unless Gibson can show that Texas's law is so extreme
as to lack a rational basis.”And “[g]iven
the complex nature of workers' compensation law and the risks that may result
from the dissemination of misleading information in this area, Texas's law
bears a rational relationship to a legitimate state interest.”

Gibson’s due process claim was that he didn’t get a hearing
or a possible appeal, but the regulation allowed him to provide a written
response to the C&D, which he didn’t do.Procedural due process is flexible; he was entitled to notice and an
opportunity for a hearing before being assessed any penalties, and this was
enough to guarantee him due process.

Gibson’s takings challenge was unripe.

Judge Reavley concurred only in the judgment to
reverse.He didn’t read the statute as
prohibiting deceptive commercial speech (though I’m not clear what his
alternative reading was), nor did he see the domain name here as misleading.

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